The Value of Conversion Tracking
Lets start this section on tracking conversions with a small anecdote. A troubled business owner once said Half the money I spend on advertising is wasted; the trouble is I don't know which half. All of us, at some time or the other, must have felt the same way, when you think about it.
In this context, Internet advertising has brought in some much needed respite to business owners when it comes to advertising. It is a clear mark up over traditional modes such as radio and television. The foremost of these is the availability of data for both advertiser and a publisher, the person who is hosting the advertising, as both are privy to the number of visitors that have been exposed to the advertisement (e.g. impressions) and the number of clicks on the advertisement. For advertisers advertising on a search engine, such as Google (the publisher), for example, then the AdWords interface will provide this data.
However, advertisers tend to be clueless when it comes to conversions such as leads, sales, sign-ups - actions that happen ON the site after the click. Regardless of the pricing model, whether it be CPM (cost per 1000 impressions), CPC (cost per click), or even CPA (cost model where the publisher gets paid only when a visitor performs a pre-decided action on the advertisers site), tracking conversions becomes an important piece of the puzzle.
So how does conversion tracking happen? Well, like everything else in the world of technology, it's a matter of using code, in this case conversion tracking code. Conversion tracking code is usually generated by the publisher (i.e. AdWords) which the advertiser then integrates into the web page which confirms the action. For example, if the action is a newsletter sign-up, the advertiser would add the code on that page of his website which displays the "Thank you for signing up" message. The conversion tracking code would keep track of the number of times visitors went from a landing page to the thank you page.
In most cases, advertising may includes a third party - a neutral, impartial technology provider who hosts the advertiser's ads or creatives, and keeps track of the number of visitors, clicks, bounces and conversions. The neutral party becomes a very important entity when a publisher is running campaigns of more than one advertiser and the advertiser is running campaigns on more than one publisher. In this case, the third party should ensure the integration of the code.
Tracking conversions thus, may dispel the notion of the skeptical advertiser mentioned above. From not knowing which half of the money spent on advertising is wasted, the advertiser may now concede, at the very least, to know which half was wasted.